Question 1

One advantage market economies have over centrally-planned economies is that market economies

Accepted Answer

A)  provide an equal distribution of goods and services to households.
B)  establish a significant role for government in the allocation of resources.
C)  solve the problem of scarcity.
D)  are more efficient.

Question 2

The phenomenon of scarcity stems from the fact that

Accepted Answer

A)  most economies' production methods are not very good.
B)  in most economies,wealthy people consume disproportionate quantities of goods and services.
C)  governments restrict production of too many goods and services.
D)  resources are limited.

Question 3

In the United States,incomes historically have grown about 2 percent per year.At this rate,average income doubles every

Accepted Answer

A)  15 years.
B)  25 years.
C)  35 years.
D)  45 years. C

Question 4

Equality means distributing society's resources in the most efficient manner.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is a principle concerning how people interact?

Accepted Answer

A)  Markets are usually a good way to organize economic activity.
B)  Rational people think at the margin.
C)  People respond to incentives.
D)  All of the above are correct.

Question 6

Public policies

Accepted Answer

A)  may be able to improve either economic efficiency or equality.
B)  may be able to improve economic efficiency but cannot improve equality.
C)  may be able to improve equality but cannot improve economic efficiency.
D)  cannot improve either equality or economic efficiency.

Question 7

A woman eats two bananas during a particular day.The marginal benefit she enjoys from eating the second banana

Accepted Answer

A)  can be thought of as the total benefit she enjoys by eating two bananas minus the total benefit she would have enjoyed by eating just the first banana.
B)  determines her marginal cost of the first and second bananas.
C)  does not depend on how many bananas she has already eaten.
D)  All of the above are correct.

Question 8

Approximately what percentage of the world's economies experience scarcity?

Accepted Answer

A)  10%
B)  40%
C)  85%
D)  100%

Question 9

The broken window fallacy states that when a window breaks and someone spends money to repair it,they have created new economic activity that would not have otherwise taken place.

Accepted Answer

A) True 
 B)False  True

Question 10

Economics deals primarily with the concept of

Accepted Answer

A)  scarcity.
B)  money.
C)  poverty.
D)  banking.

Question 11

The business cycle is measured by the

Accepted Answer

A)  production of goods and services.
B)  number of people employed.
C)  the interest rate.
D)  Both a and b are correct.

Question 12

It once took 90 percent of our population to grow our food.It now takes only 3 percent of the population to grow our food.Which of the following statements is true?

Accepted Answer

A)  This loss of jobs has been detrimental to our economy.
B)  The government should provide subsidies to encourage more people to become farmers.
C)  This reduction in the number of farmers explains the increase in the price of food.
D)  This is progress because freed-up labor that is used to produce other goods.

Question 13

Resources are

Accepted Answer

A)  scarce for households but plentiful for economies.
B)  plentiful for households but scarce for economies.
C)  scarce for households and scarce for economies.
D)  plentiful for households and plentiful for economies.

Question 14

Economists are particularly good at understanding that people respond to

Accepted Answer

A)  laws.
B)  incentives.
C)  punishments more than rewards.
D)  rewards more than punishments.

Question 15

Guns and butter are used to represent the classic societal tradeoff between spending on

Accepted Answer

A)  durable and nondurable goods.
B)  imports and exports.
C)  national defense and consumer goods.
D)  law enforcement and agriculture.

Question 16

Which is the most accurate statement about trade?

Accepted Answer

A)  Trade can make every nation better off.
B)  Trade makes some nations better off and others worse off.
C)  Trading for a good can make a nation better off only if the nation cannot produce that good itself.
D)  Trade helps rich nations and hurts poor nations. A

Question 17

According to a recent study of Chilean bus drivers,drivers who are paid by the number of passengers they transport have higher productivity than drivers who are paid by the hour.If Chilean bus drivers are paid by the number of passengers they transport and Colombian bus drivers are paid by the hour,we can conclude that

Accepted Answer

A)  Chilean bus drivers likely have a higher standard of living than Colombian bus drivers.
B)  Colombian bus drivers likely have a higher standard of living than Chilean bus drivers.
C)  Chilean and Colombian bus drivers likely have the same standard of living.
D)  Chilean and Colombian bus drivers likely have a higher standard of living than US bus drivers.

Question 18

A company that formerly produced software went out of business because too many potential customers bought illegally-produced copies of the software instead of buying the product directly from the company.This instance serves as an example of

Accepted Answer

A)  market power.
B)  inefficient trade.
C)  inadequate enforcement of property rights.
D)  the invisible hand at work.

Question 19

A marginal change is a small incremental adjustment to an existing plan of action.

Accepted Answer

A) True 
 B)False

Question 20

Suppose that a country that has a high level of output per person agrees to trade with a country that has a low level of output per person.Which country can benefit?

Accepted Answer

A)  only the one with a low level of output per person.
B)  only the one with a high level of output per person.
C)  both
D)  neither

Exam 1: Ten Principles of Economics

One advantage market economies have over centrally-planned economies is that market economies

Correct Answer
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The phenomenon of scarcity stems from the fact that

Correct Answer
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In the United States,incomes historically have grown about 2 percent per year.At this rate,average income doubles every

Correct Answer
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C

Equality means distributing society's resources in the most efficient manner.

Correct Answer
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Which of the following is a principle concerning how people interact?

Correct Answer
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Public policies

Correct Answer
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A woman eats two bananas during a particular day.The marginal benefit she enjoys from eating the second banana

Correct Answer
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Approximately what percentage of the world's economies experience scarcity?

Correct Answer
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The broken window fallacy states that when a window breaks and someone spends money to repair it,they have created new economic activity that would not have otherwise taken place.

Correct Answer
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True

Economics deals primarily with the concept of

Correct Answer
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The business cycle is measured by the

Correct Answer
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It once took 90 percent of our population to grow our food.It now takes only 3 percent of the population to grow our food.Which of the following statements is true?

Correct Answer
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Resources are

Correct Answer
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Economists are particularly good at understanding that people respond to

Correct Answer
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Guns and butter are used to represent the classic societal tradeoff between spending on

Correct Answer
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Which is the most accurate statement about trade?

Correct Answer
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A

Correct Answer
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A company that formerly produced software went out of business because too many potential customers bought illegally-produced copies of the software instead of buying the product directly from the company.This instance serves as an example of

Correct Answer
verified

A marginal change is a small incremental adjustment to an existing plan of action.

Correct Answer
verified

Suppose that a country that has a high level of output per person agrees to trade with a country that has a low level of output per person.Which country can benefit?

Correct Answer
verified

Exam 1: Ten Principles of Economics

One advantage market economies have over centrally-planned economies is that market economies

Correct AnswerverifiedShow Answer

The phenomenon of scarcity stems from the fact that

Correct AnswerverifiedShow Answer

In the United States,incomes historically have grown about 2 percent per year.At this rate,average income doubles every

Correct AnswerverifiedC

Equality means distributing society's resources in the most efficient manner.

Correct AnswerverifiedShow Answer

Which of the following is a principle concerning how people interact?

Correct AnswerverifiedShow Answer

Public policies

Correct AnswerverifiedShow Answer

A woman eats two bananas during a particular day.The marginal benefit she enjoys from eating the second banana

Correct AnswerverifiedShow Answer

Approximately what percentage of the world's economies experience scarcity?

Correct AnswerverifiedShow Answer

The broken window fallacy states that when a window breaks and someone spends money to repair it,they have created new economic activity that would not have otherwise taken place.

Correct AnswerverifiedTrue

Economics deals primarily with the concept of

Correct AnswerverifiedShow Answer

The business cycle is measured by the

Correct AnswerverifiedShow Answer

It once took 90 percent of our population to grow our food.It now takes only 3 percent of the population to grow our food.Which of the following statements is true?

Correct AnswerverifiedShow Answer

Resources are

Correct AnswerverifiedShow Answer

Economists are particularly good at understanding that people respond to

Correct AnswerverifiedShow Answer

Guns and butter are used to represent the classic societal tradeoff between spending on

Correct AnswerverifiedShow Answer

Which is the most accurate statement about trade?

Correct AnswerverifiedA

Correct AnswerverifiedShow Answer

A company that formerly produced software went out of business because too many potential customers bought illegally-produced copies of the software instead of buying the product directly from the company.This instance serves as an example of

Correct AnswerverifiedShow Answer

A marginal change is a small incremental adjustment to an existing plan of action.

Correct AnswerverifiedShow Answer

Suppose that a country that has a high level of output per person agrees to trade with a country that has a low level of output per person.Which country can benefit?

Correct AnswerverifiedShow Answer

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C

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True

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A

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